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Brief Profile INDIA’S FIRST STATE–OF–THE-ART CRAFT BREWERY AT NASHIK, MAHARASHTRA BRIEF PROFILE STRICTLY PRIVATE AND CONFIDENTIAL Disclaimer This note is distributed by International Advisory Partners (“IAP”) on a strictly confidential basis. It has been prepared exclusively for benefit and internal use of recipient and does not carry any right of reproduction or disclosure. The information contained herein can not be disclosed, reproduced or used in whole or in part without express prior written permission of IAP. The information contained in this note has not been independently verified by IAP. No representation or warranty is given by IAP as to the achievement or reasonableness or completeness of any idea and/or assumptions presented here. None of the company or its respective affiliates shall have any liability (including liability to any person by reason of negligence or negligent misstatement) for any loss arising from use of this note and its contents (express or implied). This note does not claim to contain all information that recipient may require. Recipient should not construe any information contained herein as advice relating to business, financial, legal, taxation or investment matters. Recipients are advised to consult their own business, financial, legal, taxation and other advisors concerning the company. Where this note summarizes provisions of other document, recipient should not rely on the summary and the relevant document must be referred for any conclusion. 2 EXECUTIVE SUMMARY Executive Summary OVERVIEW • The market for fine quality, hand crafted beers in India is around USD 25 million with a significant potential demand in the sector • Ace Alcobev Private Limited (“Ace”) is establishing a 50,000 hectolitre (5,000,000 litres), state-of-the-art Craft brewery in Nashik, Maharashtra that operates to highest international standards to cater to the fastest growing beer market in the world o Located 250 kms from cities of Mumbai and Pune, together comprising 8% of India’s beer consumption o Ace has secured all requisite licenses and acquired 25 acres of land for this project • Nashik is renowned for its wine and a popular destination for wine tourism. Ace has designed its brewery to attract incoming tourists for Brewery Tours, a first-of-its-kind in India, to promote its brand/s and beer consumption. • A proven management team of seasoned alcoholic beverages industry professionals has identified and initiated execution of multiple strategic initiatives to successfully position the company in the Indian market • A diverse distribution channel to be handled by one of the largest Alcobev distributors which has a network spreading across 25 key potential cities of India OPPORTUNITY • Opportunity to enter India’s fast growing craft beer market by partnering Ace: o 20,000 hectoliters capacity in year 1, increasing by 20% YOY to reach full capacity within 5-7 years o Ace has entered into a Technical Expertise & Product Development understanding with one of the oldest family owned and leading brewing groups based in Germany o Ace has entered into a Distribution understanding with one of the largest Alcobev brand distributors having a network spreading over 25 key potential cities / metros of India • Opportunity to acquire stake/ invest in India’s first-of-its kind craft beer/ brewery project o Total Project Cost : ~USD 4.50 million 4 CRAFT BEER IN INDIA India: Craft Beer The craft beer sector in India is most promising OVERVIEW • Craft beer is an American trend which has been booming globally and is now set to catch up in India in a big way • Currently there are around 3,000 craft breweries in the US, totaled an estimated USD $ 17 billion by value of craft beer sales in FY 2013 & representing 15 % of the US beer market by Volume ( The US beer market is currently valued at USD $ 100 billion ) • Micro brewing is primarily a boutique business where beer is brewed inside a premises in regulated quantities and served fresh , using quality ingredients • The Microbrewery boom started in 2008 here in India, currently 30 odd Brewpubs / microbreweries are operating across 5-6 cities and the market for fine quality hand crafted beers is around USD 25 million (Another 10 are in the process of being set up) • Craft breweries are generally small , independent and traditional with a focus on integrity, diversity , authenticity, innovation, quality of ingredients, flavours and brewing technique • There is significant potential demand in this sector since the market is dominated by one style (Lager) of beer and consumers are only now being exposed to new styles of quality and flavorful craft beers BREWING PROCESS Source: Economic Times, Prost 6 India: Craft Beer MARKET TRENDS • Brewpubs are attracting Indians away from industrial bottled beers. High end hotels and restaurants are keen to bring “ The Beer on Tap “ concept back to serve their customers different styles of international quality delicious craft brews • The preferred shelf life of beer among traders is 6-12 months • Most beer sold in India is within the price range of USD 1.3 - 2.2. Beers considered “premium” will sell for USD 2.8 - 8.5 • Bottled beer is most popular (60% of consumption) but cans and draught beer (in kegs) are growing; 330ml bottles are common • Craft brewers from USA, Australia and Europe are showing keen interest to enter the now growing Indian craft beer market GROWTH FACTORS • Quality: Craft beers taste much better than the mass market produced beers, as they are brewed in small batches with the finest quality of ingredients and equipment used to produce it. • Health Benefits: Research has shown that craft beer offers more health benefits and nutrition than red wine • More Variety: Thousands of flavourful craft beers can be brewed by using different ingredients thus providing more options to choose from • Pairing with Fine Cuisine: The brewers can produce a range of craft beers to suit nearly every kind of food, including desserts • Beers for every Season: Certain craft beers are better suited for different seasons depending on its taste and texture Source: Economic Times 7 Benefits of Craft Beer Source: www.craftbeer.com 8 COMPANY OVERVIEW Company Snapshot Year of Incorporation: 2011 • Ace Alcobev Private Limited (“Ace”) plans to establish a state-of-the-art craft brewery in Nashik, Maharashtra that operates to highest international standards to cater to the Headquarters: rapidly growing beer market in the world • Mumbai, Maharashtra o License: Received license and all clearances to manufacture up to 250,000 Brewery: hectolitres • Nashik, Maharashtra o Land: Acquired 25 acres in Nashik MIDC*, located 250 kms from Mumbai o Types of Beers: Water: Provided by MIDC and tested for beer production o Installed Capacity: Proposed to brew 50,000 hectolitres(5,000,000 litres) in the • German Lager first year • Belgian Blond Ale o Technical Expertise & Product Development: Entered into an understanding • Imperial Double India Pale with one of the oldest family owned and leading brewing groups based in Germany • Weissbier FINANCIAL HIGHLIGHTS • Dunkel • The project cost is estimated to be USD 4.50 million, with the promoters contributing • Radler USD 1.50 million, while the remaining USD 3 million being raised from Investors & Institutions Geographic Location Year 1 2 3 4 5 6 7 8 Turnover 3.05 4.00 5.04 6.17 7.40 8.75 9.69. 10.71 Delhi (USD mn) • EBITDA 0.56 0.95 1.40 1.84 2.41 3.03 3.51 4.04 (USD mn) NASHIK EBITDA % Mumbai • 18.50% 23.73% 27.82% 32.55% 32.55% 34.70% 34.70% 37.69% Pune• • Hyderabad Utilization Bangalore• • Chennai 40% 50% 60% 70% 80% 90% 95% 100% MIDC: Maharashtra Industrial Development Corporation USD 1 = INR 60 10 Marketing & Operations PRODUCT PORTFOLIO • Ace proposes to brew the following styles of beer: Type Flavour Alcohol by Volume German Lager Mild ,crisp, blond , clear , easy drinking, low hoped 5% Belgian Blond Ale Full flavored, rocky head, mouth feel -silky & sweet 6-8% Imperial Double India Pale Stronger, paler, bitter, hop aromas 8% Weissbier Made from malted wheat , smooth, strongly hoped, fruity aromas & creamy texture 5% Dunkel Dark color with a clean taste of lager, smooth , malty flavor , very little hop bitterness 5% Radler A beer based mix drink with carbonated lemonade 2-3% PACKAGING • Use of innovative packaging techniques to promote the brand and increase visibility: Exclusive Packaging One Way Keg 5L Party Keg 11 Marketing & Operations PRODUCTION DISTRIBUTION • The 1st year of brewery commissioning would have 40% • Strategic plan is to target 150 key high potential on- of the installed capacity, i.e. 20,000 hectoliters premise outlets & off-premise retail outlets in the 1st • Three stock keeping units to be maintained: year in Mumbai, Pune, Nashik, Nagpur, Aurangabad, Daman & Goa., along with installing taps & draught o 500ml and 330ml bottles mainly for the retail dispensing equipment at good potential outlets market (off-premise) • Distribution to off-premise retail outlets will be handled o 30 litre kegs for on premise consumption by one of the largest Alcobev brand distributors having o 5 litre party kegs for retail market (off-premise) a network spreading over 25 key potential cities of India • Around 50% of the production to be sold in kegs SALES CHANNELS Opportunity Strategy On-Premise Taps • Front-end presence helps increase brand • Set up 2 tap rooms/pubs, spread across 700- equity and off-premise sale 1500 sq. ft., to serve fresh beer on tap • Growth in brew pubs signals a shift in • Design a menu which pairs food with
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